The price of Brent crude, the global benchmark for oil prices, fell by almost five per cent to below $80 per barrel on Tuesday following growing hopes of an agreement between the United States and Iran to reopen the Strait of Hormuz.
The decline came after senior US officials said talks with Iran had made progress, raising the prospect that commercial shipping through the key waterway could resume as soon as this week.
According to the BBC, the US Secretary of State, Marco Rubio, said progress had been made in discussions on allowing more ships to pass through the Strait of Hormuz, a major route for global oil and liquefied natural gas supplies.
“There’s been progress made in those talks, but not finality yet. We’re hoping that will happen very shortly,” Rubio told reporters at the State Department.
US Treasury Secretary Scott Bessent said a deal to reopen the strait could be reached as soon as Tuesday or Wednesday.
“There’s a chance we may have a deal today (Tuesday) or tomorrow (Wednesday) to open the strait and move towards a more normalised position in this conflict.
“It would be freedom of movement,” he added when asked whether Iran would be allowed to charge ships passing through the waterway, he told CNBC.
Following the comments, Brent crude dropped by almost five per cent to $79 per barrel, while US West Texas Intermediate crude fell by more than five per cent to $76 per barrel, according to Oilprice.com.
Both oil benchmarks dropped to their lowest levels since July 13. The Strait of Hormuz has been central to negotiations between the US and Iran. Before the conflict began in late February, the waterway handled about one-fifth of global daily oil and liquefied natural gas supplies.
The disruption has pushed up fuel prices globally, with motorists in several countries bearing the impact of higher crude prices.
In the United Kingdom, petrol prices have returned to levels recorded at the beginning of the conflict, with the average price reaching £1.60 per litre, according to the RAC motoring group.
In the United States, petrol prices are averaging above $4 per gallon, according to the American Automobile Association, while diesel is almost $5.40 per gallon.
In Nigeria, the average petrol price is N1,260 per litre,
However, details of a potential agreement between Washington and Tehran have not been released, despite the US government’s claims that negotiations are progressing.
Qatar, a key mediator between the two countries, said it was continuing efforts with other mediators to achieve a diplomatic resolution to the conflict, although it acknowledged that no direct talks were currently planned, the BBC reported.
On Monday, US President Donald Trump warned Iran that it faced its “last chance” to reach a deal allowing commercial shipping to resume through the Strait of Hormuz.
Trump said he had called off “massive” strikes on Iran to allow talks to resume. Iran, however, has maintained that it is not negotiating with the US and has no plans to do so, saying it is instead holding discussions with Oman.
The fall in oil prices also lifted US stock markets on Tuesday, with investors reacting positively to the prospect of lower oil prices and corporate results linked to artificial intelligence.
